HomeMy WebLinkAbout14 OFFICE LEASE 375 CENTENNIAL WAY 12-04-06
AGENDA REPORT
Agenda Item
Reviewed:
City Manager
Finance Director
MEETING DATE: DECEMBER 4,2006
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: CHRISTINE A. SHINGLETON, ASSISTANT CITY MANAGER
SUBJECT: OFFICE LEASE FOR 275 CENTENNIAL WAY
SUMMARY:
Authorization is requested to execute an office lease for two suites at 275 Centennial
Way to provide supplemental office space for city hall employees and certain city
operational functions.
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize the City Manager to execute the proposed Office lease for Suites 104 and
104 A at 275 Centennial Way.
2. Appropriate $36,785 from the unappropriated fund balance in the Town Center
Redevelopment Project Area, $36,785 from the unappropriated fund balance in the
South Central Redevelopment Project Area, and $31,530 from the unappropriated fund
balance in the MCAS Tustin Redevelopment Project Area.
FISCAL IMPACT:
Annual rent is anticipated to be $43,680.06, adjusted annually by a five percent (5%)
escalation factor. The landlord requires a $3,640.08 security deposit and will provide a
tenant allowance credit back to the City in the amount of $2,092. For budget purposes,
initial tenant improvements are estimated to be $80,325. The fiscal Year 2006-07
necessary funding for said projected costs is estimated to be $105,100.
BACKGROUND:
Current Tustin Legacy development activity and other program demands affecting a
number of City operating departments has placed considerable space constraints at
City Hall on staff work spaces and has begun significantly affecting the ability of staff to
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efficiently operate. Additional staffing also programmed in the Fiscal Year 2006-07
budget necessitate that additional space to accommodate new staffing be created, at
least temporarily. It will take some time to complete a more comprehensive space
needs assessment of future projected space needs for all City operations including
those at City Hall and the Police Department and to also evaluate construction and
financial options for any future needed expansion of City Hall. Fortunately,
approximately 2,092 of available rental space has recently come up across the street
from City Hall at 275 Centennial Way. City staff has been successful in negotiating a
three-year lease for such space, with a two-year extension period option also available.
Further, the City Attorney's office has reviewed the draft agreement and requested
changes have been included in the final lease. A summary of the major terms of the
lease are as follows:
1. Gross Rent: during the proposed three year base lease term, gross rent would be
payable in equal monthly installments as shown below, with year 4 and 5 of a lease
option extension period also identified (the City's share of operating expenses is already
Included in gross rent).
Year
1
2
3
4
5
Mo. Rent
$3,640.08
$3,828.36
$4,037.56
$4,246.76
$4,455.96
Annual Rent
$43,680.96
$45,940.32
$48,450.72
$50,961.12
$53,471.52
Based on the rates above, the first year rent equates to a rate per square foot per
month of $1.74 adjusted annually on the basis of a five percent escalation. With a
proposed tenant improvement allowance in the first year of $1.00 per square foot, the
effective gross rent in the first year is $1.66, far below current market values for similar
properties in Tustin.
2. Security deposit: $3,640.08
3. The rent commencement date: begins 60 days after delivery of the premises to City
by Lessor.
4. Tenant improvement allowance: $2,092 (or $1.00 per square foot).
5. Parking: two reserved parking spaces and non-exclusive use of all unreserved
parking is available to the City in the Larwin Square office and retail center.
6. Landlord is responsible for providing, heat and air conditioning services, electricity
(within limits defined in lease), exterior building janitorial services and building
maintenance services.
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7. Insurance: an amount of not less than $1 million dollars which can be provided
through any combination of self insurance, participation in a joint powers authority or
commercial insurance as customary for public entities.
It is currently anticipated that in addition to rent, certain furniture, phone and technology
purchases, and improvements will be necessary to accommodate the temporary move,
as well as some minor tenant improvements. An option for IT systems that the City is
currently exploring is the installation of the City's own fiber optic connection to the
building from City Hall. At this time, the following is an anticipated preliminary budget
for these anticipated expenses:
Design Services for Tenant
Improvements
$ 5,000
Tenant Improvements (net of
any Landlord rebate)
3,500
Furniture and equipment:
25,000
Phone modifications and
equipment
It Installation, computers,etc.
5,000
38,000
Contingency (5%)
3,825
Subtotal
$80,325
It is recommended that the first six months of rent and initial improvements necessary
for occupancy, which are estimated at approximately $105,100, be funded at least at
the outset, by the Town Center, South Central, and MCAS Redevelopment Project
Areas. Any necessary future adjustments will be made during the 2006-07 Mid-Year
budget review based on actual operational costs.
Christine A. Shingleton
Assistant City Manager
STANDARD OFFICE LEASE
THIS AGREEMENT OF LEASE ("Lease") made by and between PK II
Larwin Square SC LP, a Delaware limited partnership ("Landlord") and City of Tustin
("Tenant").
WITNESSETH, that for and in consideration of the Rent hereinafter reserved and of the
mutual covenants and agreements set forth, Landlord and Tenant do hereby mutually agree as
follows:
1. Effective Date. This Lease shall become legally binding as of the date specified above
which shall be the date when both Landlord and Tenant shall have executed this Lease.
2. Premises. Landlord does hereby lease and demise to Tenant for use only by Tenant, and
Tenant does hereby hire, lease and take from Landlord, to have and to hold for the Lease Term
and upon the covenants and conditions hereinafter set forth, the office spaces known as Suites
104 and 104A consisting of approximately 2,092 combined usable square feet of floor area (the
"Premises") in the building owned by Landlord located at 275 Centennial Way, Tustin, CA
92780 (hereinafter known as "Building") and County of Orange, State of California, shown on
Exhibit A attached hereto and made a part hereof.
3. Lease Term. The term hereof shall be for a period of Thirty-six (36) months (the "Lease
Term") (or until such Lease Term shall sooner cease and expire as hereinafter provided)
commencing on the "Delivery Date" (as defined hereinbelow) and expiring Thirty-six (36)
months thereafter.
4. Delivery Date: The later to occur of (a) the date a Lease is executed by both Landlord and
Tenant; or, (b) Landlord's notification to Tenant the Premises is available for possession.
5. Rent Commencement Date. Tenant's obligation to pay any amount of "Rent" (as defined
hereinbelow) under this Lease shall commence upon the "Rent Commencement Date" which
shall be Sixty (60) days following the Delivery Date
6. Security Deposit. Three Thousand Six Hundred Forty and 08/100 Dollars ($3,640.08).
Tenant will pay the Security Deposit in advance upon execution ofthe Lease.
7. Rent and Rent Adjustments.
A. Rent. Tenant shall pay, without notice, deduction, setoff or abatement, to Landlord
at Landlord's address as specified in Notices, or such other address as Landlord may notify
Tenant of in writing, a monthly Gross Rent of Three Thousand Six Hundred Forty and 08/1 00
Dollars ($3,640.08) payable in equal consecutive monthly installments in advance, on the first
day of each calendar month during the Lease Term hereof. Tenant will pay the first month's Rent
in advance upon execution of the Lease.
Gross Rent During Initial Term:
Lease Monthly Annual
Year Rent Rent
I $3,640.08 $43,680.96
2 $3,828.36 $45,940.32
3 $4,037.56 $48,450.72
B. Real Estate Taxes. Notwithstanding anything to the contrary contained herein,
Tenant's share of Real Estate Taxes have been included in Gross Rent.
C. Operating Expenses. Notwithstanding anything to the contrary contained herein,
Tenant's share of Operating Expenses have been included in Gross Rent.
8. Commissions. Tenant warrants and represents that it has dealt with no real estate broker
or person entitled or claiming a commission or fee in connection with this Lease, and in the event
any claim shall be made against Landlord or the Building predicated on a commission or fee
payable in connection with this Lease and any such other dealing by Tenant, Tenant agrees to
defend the same and indemnifY Landlord against such claim.
9. Parking. Landlord shall, at the commencement of the term of this Lease, allow Tenant to
utilize two (2) reserved space in the parking lot adjacent to the Building; otherwise Tenant may
utilize unreserved parking on a non-exclusive, first-come, first-served basis with other employees
and/or customers of Landlord and customers of Ten ant.
10. Option to Extend Lease Term. Tenant is hereby given the option to extend the Lease
Term on all of the provisions contained in this Lease for an additional two (2) year period
commencing upon expiration of the initial Lease Term (the "Extended Term"), except Gross
Rent during the Extended Term shall be as set forth below, paid in accordance with the terms of
this Lease. Such Extended Term shall be exercised by Tenant giving written notice ("Option
Notice") to Landlord at least one hundred eighty (180) days before the expiration of the Lease
Term. If Tenant is in default of its obligations under this Lease on the date of giving such Option
Notice, such Option Notice shall be totally ineffective. If Tenant is in default of its obligations
under this Lease on the date the Extended Term is to commence, the Extended Term shall not
commence and this Lease shall expire at the end of the initial Lease Term.
Tenant shall have no other right to extend the Lease Term beyond the Extended Term. Said
option to extend shall be available only to Tenant and shall not be available to any Transferee.
Gross Rent During Extended Term:
Lease Monthly Annual
Year Rent Rent
4 $4,246.76 $50,961.12
5 $4,455.96 $53,471.52
11. Lease Documents. Attached hereto are Schedule I ("Basic Terms and Conditions"),
Exhibits A ("Site Plan"), B ("Rules and Regulations") and Addendum 1 ("Tenant Improvement
Allowance") each of which attachments shall be and hereby is made as fully a part hereof as if
included herein, and this Lease and all attachments hereto collectively constitute the "Lease."
LANDLORD:
PK II Larwin Square SC LP,
a Delaware limited partnership
By: PK II Larwin Square GP LLC, its General Partner
By: PK II Holdco LLC, its Member
By: PK II Holdings LLC, its Managing Member
By: Kimco PK, LLC, its Managing Member
By: Kimco PK Inc., its Managing Member
By:
Name:
Title:
TENANT:
City of Tustin
By:
Its:
SCHEDULE 1
BASIC TERMS AND CONDITIONS FOR STANDARD OFFICE BUILDING
LEASE
1. Possession. Tenant agrees that (i) Tenant shall accept the Premises in an "as is"
condition as of the date Tenant takes possession of the Premises with Landlord's consent,
(ii) Landlord shall have no responsibility to make any improvements which may be
required to prepare the Premises for Tenant's use, (iii) Tenant, at its sole cost and
expense, shall complete any improvements which may be required upon the Premises,
and (iv) all such improvements shall be done in accordance with Paragraph 5 of this
Schedule 1.
Notwithstanding anything to the contrary contained hereinabove, Landlord shall
deliver the Premises in a clean condition, free of debris, with carpets cleaned, damaged or
missing ceiling tiles replaced, and existing HV AC unites), lighting and electrical systems
mechanical and fire protections systems in good working order. In addition, Landlord
shall provide written verification from a specialist that there is no air-borne mold problem
within the Premises.
2. Services and Utilities. Provided Tenant is not in default under any of the terms,
covenants and conditions of this Lease, Landlord exclusively shall furnish and supply:
A. Heat and Air-Conditioning. Heat and/or air-conditioning to provide a temper-
ature and humidity condition required, in Landlord's judgment and in accordance with
government guidelines for occupancy of the Premises under normal office building
operations daily, Monday through Friday, from 8:00 a.m. to 6:00 p.m. (Saturdays,
Sundays and holidays excepted). Whenever air-conditioning or heat generating machines
or equipment are used in the Premises which affect the temperature otherwise maintained
by the heating or air-conditioning system, Landlord reserves the right, at its option, either
to require Tenant to discontinue use of such machines or equipment or to install
appropriate supplementary equipment in the Premises to reduce or offset such effect, and
the cost of such equipment and installation shall be paid by Tenant to Landlord promptly
on being billed therefor, and the cost of operation and maintenance of said supplementary
equipment shall be paid by Tenant to Landlord on the monthly Rent payment dates at
such rates as may be agreed upon, but in no event at a rate less than Landlord's actual cost
therefor oflabor, materials and utilities.
B. Electricity. Quantities of electric current reasonable in Landlord's judgment for
normal lighting and fractional horsepower office machines will be supplied through
conventional wall outlets. If Tenant desires to use any equipment, such as data
processing equipment, apparatus or devices which will cause the amount of electricity
furnished or supplied to the Premises to exceed the amount of electricity usually
furnished to office space, Tenant may do so, provided, however, that he obtain prior
written consent of Landlord and all additional costs and expenses (whether of a capital or
operating nature) of such additional electricity shall be borne by Tenant. At Landlord's
option at any time, separate meters for determining electrical consumption may be
installed by Landlord, and Tenant will pay the full amount billed on such meters together
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with all costs of their acquisition, installation and maintenance. Tenant shall pay to the
utility company the utility charges shown on such meters.
C. Water. Water at those points of supply provided for non-exclusive general use
of other tenants in the Building, drawn through fixtures installed by Landlord, or by
Tenant at Tenant's risk and expense and with Landlord's written consent. At Landlord's
option at any time, separate meters for determining water consumption may be installed
by Landlord, and Tenant will pay the full amount billed on such meters together with all
costs of their acquisition, installation and maintenance. Tenant shall pay to the utility
company the utility charges shown on such meters.
D. Janitor Service. Janitor services in and about the Premises in the manner and to
the extent deemed to be standard by Landlord.
E. Maintenance. Routine maintenance service for public areas of the Building in
the manner and to the extent deemed to be standard by Landlord.
F. Telephone and/or Computer/Data Systems. Tenant acknowledges and agrees
that all of its telephones systems, computer/data systems and vault system shall be
installed (subject to Landlord's consent to the location and extent of such installation
within the Building) and operated separately from Landlord's telephones systems,
computer/data systems and vault system. Such separate installation shall be reasonably
approved by Landlord. Tenant expressly agrees to indemnify Landlord from any claims
by third parties against Landlord which arise directly or indirectly from Tenant's, its
agents or employees breach of this provision, including but not limited to access to
Landlord's computer/data systems or vault system.
Landlord does not warrant that any work performed, services, and utilities will be free
from shortages, failures, variations, or interruptions caused by repairs, renewals,
improvements, changes of service, alterations, strikes, lockouts, labor controversies,
accidents, inability to obtain services, fuel, steam, water or supplies, governmental
requirements or requests, or other causes beyond the reasonable control of Landlord. No
such failure or interruption of service shall be deemed an eviction or disturbance of
Tenant's use and possession of the Premises or any part thereof, or render Landlord liable
to Tenant for damages, by abatement of rent or otherwise, or relieve Tenant from
performance of Tenant's obligations under this Lease. Landlord in no event shall be
liable for damages by reason of loss of profits, business interruptions or other
consequential damages.
3. Condition and Care of Premises. By entry hereunder, Tenant conclusively
accepts the Premises as being in good and sanitary order, condition and repair. Landlord
shall endeavor to keep the Premises (other than Tenant's furnishings, equipment,
alterations or personal property) in good order and condition during the Term at Tenant's
expense, and shall attempt to make all repairs thereto and to the Building which Landlord
deems necessary, including without limitation repairs or replacements deemed necessary
as a result of any misuse or neglect by Tenant or its employees, agents or visitors, or as a
result of the removal by Tenant of any of its movable furniture or trade fixtures, or any
other property from the Premises. Repairs and replacements of light bulbs, lighting
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fixtures, ballasts, fire extinguishers in the Premises, keys and locks, and other office
fixtures of Building standard included in the Premises shall be performed by Landlord at
Tenant's expense. Anything contained in this Paragraph to the contrary notwithstanding,
Landlord shall repair and maintain the structural portions of the Building, including the
basic plumbing, heating and air-conditioning and electrical systems installed or furnished
by Landlord, unless such maintenance and repairs are caused in part or in whole by the
act, neglect, fault of or omission of any duty by Tenant, its agents, servants, employees or
invitees, in which case Tenant shall pay to Landlord the actual cost of such maintenance
and repairs. There shall be no abatement of Rent and no liability of Landlord by reason
of any injury to or interference with Tenant's business arising from the making of any
repairs, alterations or improvements in or to any portion of the Building or the Premises
or in or to fixtures, appurtenances and equipment therein. Tenant specifically waives the
rights it may have under the provisions of any law, statute or ordinance now or hereafter
in effect, or otherwise, to make repairs at Landlord's expense. Except as specifically set
forth herein, Landlord has no obligation to alter, improve or decorate the Premises.
Tenant shall keep the interior of the Premises in good order and condition and, upon
termination of this Lease, Tenant shall deliver possession of the Premises to Landlord as
set forth in Paragraphs 5 and 13 hereof.
Tenant acknowledges that neither Landlord nor any agent, employee or contractor of
Landlord has made any representation or warranty with respect to the Premises, the
Building or the terms hereof except as expressly set forth herein, or with respect to the
suitability or condition of the Premises or Building for the conduct of Tenant's business.
This Lease does not grant any rights to light or air.
4. Use of Premises. Tenant shall use the Premises for a general office use and for
no other use or purpose. Tenant's use of the Premises as provided in this Lease shall be in
accordance with the following:
A. Matters Affecting Insurance. Tenant shall not do, bring or keep anything in or
about the Premises that will cause a cancellation or threatened cancellation of insurance
covering the Building. If the rate of any insurance carried by Landlord is increased as a
result of Tenant's use, including the use contemplated herein, Tenant shall pay to
Landlord, within fifteen (15) days before the date Landlord is obligated to pay a premium
on the insurance, or within thirty (30) days after Landlord delivers to Tenant a certified
statement from Landlord's insurance carrier stating that the rate increase was caused by an
activity of Tenant on the Premises as permitted in this Lease, whichever date is later, a
sum equal to the difference between the original premium and the increased premium.
B. Regulations; Other Tenants. Tenant shall not do or permit anything to be done
in or about the Premises which shall in any way conflict with any law, ordinance, rule or
regulation which is or may hereafter be enacted or promulgated by any public authority;
or in any way disturb, obstruct or interfere with the rights of other tenants ofthe Building,
or injure or annoy them; or use, or allow the Premises to be used, for any improper,
immoral, unlawful or objectionable purpose. Tenant shall not do anything in the
Premises tending to establish or maintain a nuisance; nor shall Tenant solicit or canvas
any occupant of the Building or do any act tending to injure the reputation of the
Building. Tenant's compliance with all of the requirements of any municipal, county,
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state or federal authority or law now in force, or which may hereafter be in force, shall be
at its sole cost. More particularly, but without limitation, if this Lease shall permit, or
Landlord shall hereafter consent to any non-office use of the Premises, the parties agree
that Tenant shall be solely responsible for obtaining, at Tenant's sole cost and expense,
any necessary zoning or other governmental approvals, variances, special use permits or
otherwise satisfying any such requirements, without, however, in doing so, affecting or
impairing in any way Landlord's current and permitted use of the Building; Landlord
makes no representations whatsoever that any of the foregoing items may be obtained,
and any delays in Tenant's obtaining the same shall not delay commencement of the term
or of Tenant's obligations under this Lease, including but not limited to the obligation to
pay Rent hereunder. Tenant shall not permit the Premises to be used for any kind of
commercial eating establishment, for retail sales, for sleeping purposes, for washing
clothes, or for cooking or food or beverage use or preparation therein (other than vending
machines for employees and employee snack food preparation as may be permitted or
installed by Landlord).
c. Heavy Objects. Tenant shall not bring into or install in the Premises any
objects, such as but not limited to any metal safes or computers, the weight of which,
singularly or in aggregate, would exceed the maximum safe load per square foot of the
Premises.
5. Alterations. Tenant shall make no additions, changes, alterations or other
improvements (the "Work") to the Premises or any electrical or mechanical facilities,
equipment or systems pertaining to the Premises or Building without the prior written
consent of Landlord. Landlord may impose as a condition of such consent such
reasonable requirements as Landlord in its sole discretion may deem desirable including
without limitation the submission of drawings, plans and specifications for Landlord's
written approval, the obtaining of necessary permits, the posting of bonds, and require-
ments as to the manner in which and the term or times at which such Work shall be done.
In no event shall any Work affect the structure of the Building or its exterior appearance.
If Landlord consents to the Work by Tenant, any contractor selected by Tenant to do
the same must first be approved in writing by Landlord. Tenant shall hold Landlord
harmless of and from any cost or liability with respect to, and shall keep the Premises and
Building free from any mechanic's, materialman's or similar liens placed upon the
Premises or Building in connection with any such Work. Tenant shall give Landlord
notice at least thirty (30) business days prior to the commencement of any such Work on
the Premises to afford Landlord the opportunity of posting appropriate notices of non-
responsibility. Prior to the commencement of any such Work, Tenant shall give evidence
to Landlord that appropriate insurance satisfactory to Landlord has been obtained by
Tenant and contractors for the protection of Landlord, including naming Landlord as an
additional insured, and its tenants and invitees from damage or injury resulting from the
Work, and if requested by Landlord, labor and material, payment, performance, comple-
tion and/or lien bonds sufficient to cover the Work. All such Work shall become the
property of Landlord upon completion and shall be surrendered with the Premises, as a
part thereof, at the termination of this Lease, whether by lapse of the Lease Term,
termination for default, or otherwise, without compensation, credit or setoff to Tenant,
except that Landlord may require Tenant to remove all or part of such Work and to repair
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any damage to the Premises caused by such removal, and to restore the Premises or any
part thereof to the original condition, all at Tenant's expense. Landlord may elect to
charge Tenant at the time of installation for removal and restoration expense of same to
be paid before the alterations take place.
At any time during the Term and when Tenant is not in default hereunder, all articles of
personal property and all business and trade fixtures, machinery and equipment, furniture
and movable partitions owned by Tenant or installed by Tenant at its expense in the
Premises shall be and remain the property of Tenant and may be removed by Tenant.
Tenant shall bear the cost to repair any damage to the Premises upon termination of this
Lease for any cause whatsoever caused by such removal. Any property remaining upon
the Premises after termination of this Lease shall be deemed abandoned and Landlord
may, at its option, keep the same for its use or remove the same in any manner that
Landlord shall choose, and store said effects at Tenant's expense without liability of
Landlord to Tenant for loss thereof, and Tenant shall pay on demand any and all expenses
incurred in such removal, including court costs and attorneys' fees and storage charges on
such effects, or Landlord may, at its option, pursue any other rights or remedies available
to Landlord at law or equity.
6. Advertising. Tenant agrees that no sign, advertisement, display or notice shall
be inscribed, painted or affixed on any part of the outside or inside of the Premises or
Building, except as Landlord may approve in advance in writing for the directories or
doors of offices, and then only in such size, color and style as Landlord shall approve.
7. Deliveries. No freight, furniture or other bulky matter of any description will be
received into the Building or carried in the elevators, except as approved by Landlord.
All moving of furniture, material and equipment must be with the prior permission of
Landlord and in accordance with Landlord's reasonable rules and instructions; Tenant
agrees promptly to remove from the public area adjacent to said Building any of Tenant's
furniture, materials, equipment and/or other property there delivered or deposited.
8. Damage to Premises. All injury to the Premises or the Building caused by
moving the property of Tenant or its employees, agents, guests or invitees and all
breakage done by Tenant, or the agents, servants, employees and visitors of Tenant, as
well as any damage caused by fire due to the negligence of Ten ant, or its agents, servants,
employees and visitors shall be repaired as determined by Landlord, at the expense of
Tenant. At Tenant's expense, Landlord shall have the right to replace, or require Tenant
to replace, all plate glass, including windows, in or upon the Premises or Building which
may be damaged or broken by Tenant or its employees, agents, guests or invitees.
9. Landlord's and Tenant's Insurance. From and after the earlier of the Effective
Date or Tenant's entry onto the Premises with Landlord's consent, Tenant shall, at all
times during the Lease Term and at its sole cost and expense, maintain workers'
compensation insurance if and to the extent required by law; and shall, in addition,
maintain comprehensive general liability, property damage liability, and contractual
liability insurance naming Landlord and, if requested, Landlord's first mortgagee and/or
beneficiary and any and all of Landlord's employees, agents, partners, directors, officers,
and assignees as Landlord may direct from time to time as additional insureds for all
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sums of which Landlord shall become or may become legally obligated to pay as damages
or awards because of bodily injury or property damage liability caused by any occurrence
or incident and arising out of the maintenance, occupancy or use of the insured Premises
and all operations necessary or incidental thereto. Such policies shall provide that
Tenant's insurance carrier shall have the duty to defend, indemnify and/or settle any suit
against Landlord seeking damages on account of such bodily injury or property damage
liability even if any of the allegations of such suit are groundless, false or fraudulent. The
above-mentioned liability insurance shall be in an amount of not less than One Million
Dollars ($1,000,000) combined each occurrence and in the aggregate insuring against all
liability with respect to the Premises or arising out of the maintenance, use or occupancy
thereof. Tenant shall also at all times during the Lease Term and at its sole cost and
expense maintain such insurance, in standard and reasonable amounts, as would be
common, reasonable, and prudent for the type of business operated in the Premises by
Tenant. All such insurance shall be primary insurance as respects Landlord and not
participating with any other available insurance, all insurance shall be provided through
any combination of self-insurance, joint powers authority insurance, and/or commercial
insurance as is customary for public entities by an insurance carrier or carriers with
general policyholders' rating of not less than A, so rated in the most current available
"Best's" Insurance Guide, and shall require not less than thirty (30) days' cancellation
notice to Landlord. In no event shall the limits of said policy or policies be considered as
limiting the liability of Tenant under this Lease. Tenant shall furnish a copy of a
certificate of insurance evidencing the above coverages to Landlord no later than the
commencement of the Term; provided, however, that the failure to supply said certificate
of insurance and waiver prior to the commencement of the Term shall not be or be
deemed to be a waiver or release by Landlord of Tenant's obligation to maintain such
insurance coverage as set forth.
Landlord, at all times during the Lease Term, shall maintain in effect a policy or
policies of insurance providing protection for the following liabilities and/or risks: (a)
public liability for bodily injury and property damage arising from Landlord's ownership
and/or operation of the Building with coverage limits at least equal to those Tenant is
required to maintain above and (b) any peril, in Landlord's sole discretion, insurable
under an All Risk policy covering the building of which the Premises is a part, exclusive
of any item insured by Tenant above, in an amount which is the greater of eighty percent
(80%) of its full replacement cost (exclusive of the cost of excavations, foundations and
footings) or such amount as Landlord's mortgagee or beneficiary may require Landlord to
maintain. Landlord's obligation to carry the All Risk insurance provided for in this
Paragraph may be satisfied by inclusion of said building within the coverage of any
so-called blanket policy or policies of insurance carried and maintained by Landlord,
provided that the coverage afforded will not be reduced or diminished by reason of the
use of such blanket policies of insurance.
10. Indemnity/Mutual Waiver of Rights. Landlord shall not be liable for, and
Tenant agrees to defend with counsel satisfactory to Landlord and to indemnify and
protect Landlord from any claim, demand, liability, judgment, award, fine, mechanics lien
or other lien, loss, damage, expense, charge or cost of any kind or character (including
actual attorney fees and court costs) arising from (a) any labor dispute involving Tenant
or its contractors and agents or (b) the construction, repair, use, occupancy or enjoyment
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of the Premises by Tenant, Tenant's assignees and/or subtenants and their respective
contractors, agents, licensees or invitees (hereinafter "Claims"); provided, however,
Tenant shall have no obligation to defend or indemnify Landlord from Claims (i) made in
accordance with Paragraph 19 of this Lease or (ii) caused by the negligence of Landlord.
Landlord (for itself and its insurer, and to the extent and on the condition that Tenant
carries and maintains the insurance at all times required under Paragraph 9,) hereby
waives any rights, including rights of subrogation, and Tenant (for itself and its insurer,
and to the extent and on the condition that Landlord carries and maintains insurance at all
times,) hereby waives any rights, including rights of subrogation, each may have against
the other, and Tenant (for itself and its insurer) waives any rights, including rights of
subrogation, it may have against any of the other tenants of the Building (provided such
other tenants have waived such rights against Tenant) for compensation of any loss or
damage occasioned to Landlord or Tenant, as the case may be, with regard to their
respective property, the Premises, its contents or portions of the Building, arising from
any risk generally covered by the All Risk insurance Landlord and Tenant shall carry and
maintain under this Lease. The foregoing waivers shall be operative only so long as
available in the State where the Building is located and so long as no policy is invalidated
thereby.
11. Casualty Damage. If the Premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give prompt written notice thereofto Landlord. In case the
Building shall be so damaged by any casualty covered by Landlord's insurance that
substantial alteration or reconstruction of the Building shall, in Landlord's sole opinion,
be required (whether or not the Premises shall have been damaged by such casualty) or in
the event any mortgagee under a mortgage or deed of trust covering the Building should
require that the insurance proceeds payable as a result of said casualty be used to retire
the mortgage debt, Landlord may, at its option, terminate this Lease and the Lease Term
and estate hereby granted by notifying Tenant in writing of such termination within sixty
(60) days after the date of such damage, in which event the Rent shall be abated as of the
date of such damage. If Landlord does not thus elect to terminate this Lease, Landlord
shall within ninety (90) days after the date of such damage commence to repair and
restore the Building and shall proceed with reasonable diligence to restore the Building
(except that Landlord shall not be responsible for delays outside its control) to
substantially the same condition in which it was immediately prior to the happening of
the casualty, except that Landlord shall not be required to rebuild, repair, or replace any
part of Tenant's furniture or furnishings or of fixtures and equipment removable by
Tenant under the provisions of this Lease, but such work shall not exceed the scope of the
work done in originally constructing or rehabilitating the Building; nor shall Landlord in
any event be required to spend for such work an amount in excess of the net insurance
proceeds actually received by Landlord as a result of the casualty. Landlord shall not be
liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant
resulting in any way from such damage or the repair thereof, except that, subject to the
provisions ofthe next sentence, Landlord shall allow Tenant an abatement of Rent during
the time and to the extent the Premises are unfit for occupancy. If the Premises or any
other portion of the Building be damaged by casualty resulting from the fault or
negligence of Tenant or any of Tenant's agents, employees, or invitees, the Rent shall not
be diminished during the repair of such damage and Tenant shall be liable to Landlord for
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-7-
the cost and expense of the repair and restoration of the Building caused thereby to the
extent such cost and expense is not covered by insurance proceeds. Any insurance which
may be carried by Landlord or Tenant against loss or damage to the Building or to the
Premises shall be for the sole benefit of the party carrying such insurance and under its
control. Tenant hereby specifically waives any and all rights it may have under any law,
statute, ordinance or regulation to terminate the Lease by reason of casualty or damage to
the Premises or Building, and the parties hereto specifically agree that the Lease shall not
automatically terminate by law upon destruction of the Premises.
12. Condemnation.
A. If the whole or, in the sole opinion of Landlord, substantially the whole of the
Premises should be condemned, or if any mortgagee under any deed of trust or mortgage
covering the Building shall determine to apply condemnation proceeds or retire mortgage
debt, then Landlord shall have the right to terminate this Lease as of the date when
physical possession of the Building or the Premises is taken by the condemning authority.
If less than the whole but, in the sole opinion of Landlord, a substantial portion of the
Building or the Premises is thus taken or sold, Landlord (whether or not the Premises are
affected thereby) may terminate this Lease by giving written notice thereof to Tenant
within sixty (60) days after the right of election accrues, in which event this Lease shall
terminate as of the date when physical possession of such portion of the Building or
Premises is taken by the condemning authority. If upon any such condemnation of less
than the whole or substantially the whole of the Building or the Premises, this Lease shall
not be thus terminated, the Rent payable hereunder shall be diminished by an amount
representing that part of the Rent as shall properly be allocable to the portion of the
Premises which was so condemned and Landlord shall, at Landlord's sole expense,
restore and reconstruct the Building and the Premises to substantially their former
condition to the extent that the same, in Landlord's judgment, may be feasible, but such
work shall not exceed the scope of the work done in originally constructing or
rehabilitating the Building, nor shall Landlord in any event be required to spend for such
work an amount in excess of the net amount received by Landlord as compensation
awarded upon a taking of any part or all of the Building or the Premises. Subject to the
rights of any mortgagee under a mortgage or deed of trust covering the Building,
Landlord shall be entitled to and shall receive the total amount of any award made with
respect to condemnation of the Premises or Building, regardless of whether the award or
awards shall be made to Tenant or to any person claiming through or under Tenant,
Tenant hereby irrevocably assigns to Landlord all of its right, title and interest in and to
any such awards. No portion of any such award or awards shall be allowed to or paid to
Tenant for any so-called bonus or excess value of this Lease by reason of the relationship
between the rental payable under this Lease and what may at the time be a fair market
rental for the Premises, nor for Tenant's unamortized cost of leasehold improvements.
The foregoing notwithstanding, and if Tenant be not in default for any reason, Landlord
shall turn over to Tenant, promptly after receipt thereof by Landlord, that portion of any
such award received by Landlord hereunder which is attributable to Tenant's fixtures and
equipment which are condemned as part of the property taken but which Tenant would
otherwise be entitled to remove, and the appraisal of the condemning authority with
respect to the amount of any such award allocable to such items shall be conclusive.
Tenant hereby specifically waives any and all rights it may have under any law, statute,
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ordinance or regulation to terminate or petition to terminate this Lease upon partial
condemnation of the Premises or Building and the parties hereto specifically agree that
this Lease shall not automatically terminate upon condemnation.
B. Landlord may, without any obligation or liability to Tenant and without affecting
the validity and existence of this Lease other than as hereafter expressly provided, agree
to sell and/or convey to the condemnor, without first requiring that any action or
proceeding be instituted or, if such action or proceeding shall have been instituted,
without requiring any trial or hearing thereof (and Landlord is expressly empowered to
stipulate to judgment therein), the Premises or portion hereof, sought by the condemnor,
free from this Lease and the rights of Ten ant hereunder.
C. The words "condemnation" or "condemned" as used herein shall mean the taking
for any public or quasi-public use under any governmental law, ordinance, or regulation
or the exercise of, or intent to exercise, the power of eminent domain, expressed in
writing, as well as the filing of any action or proceeding for such purpose, by any person,
entity, body, agency or authority having the right or power of eminent domain, and shall
include a voluntary sale by Landlord (without obtaining Tenant's permission and without
the necessity of institution of any legal or administrative proceeding) to any such person,
entity, body, agency or authority, either under threat of condemnation expressed in
writing, or while condemnation proceedings are pending, and shall occur in point of time
upon the actual physical taking of possession pursuant to the exercise of said power of
eminent domain or the date of conveyance pursuant to such sale, whichever is applicable.
13. Lease Termination. At the termination of the Lease, by lapse of time or
otherwise:
A. Tenant shall surrender all keys of the Premises to Landlord and make known to
Landlord the explanation of all combination locks remaining on the Premises.
B. Tenant shall return to Landlord the Premises and all equipment and fixtures in as
good condition as when Tenant originally took possession or as it is thereafter, but,
subject to the provisions of Paragraphs 5, above, ordinary wear and tear and to the extent
covered by proceeds of insurance, loss or damage by casualty excepted.
14. Defaults and Remedies.
A. The occurrence of anyone or more of the following events shall constitute a
material default and breach of this Lease by Tenant:
(i) The failure by Tenant to make, as and when due, any payment of Rent,
Additional Rent, or other charges payable by Tenant hereunder, when due.
(ii) The vacation of all or a substantial portion of the Premises by Tenant.
"Vacation" is defined to include, without limitation, any absence of Tenant from the
Premises for three (3) days or longer.
(iii) The failure by Tenant to observe or perform any of the express or implied
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terms, covenants, and conditions of this Lease to be obseryed or performed by Tenant
other than the payment of Rent.
B. Following the occurrence of any default specified in subparagraphs (i), (ii) and
(iii) of Paragraph A, Landlord shall give to Tenant, and any subtenant, a written notice
specifYing the nature of the default and the provisions of this Lease breached and
demanding that Tenant and any subtenant, either fully cure each such default within the
period specified in the corresponding lettered subparagraphs below or quit the Premises
and surrender the same to Landlord:
(i) For non-payment of Rent or Additional Rent, three (3) days;
(ii) For vacation of the Premises, three (3) days;
(iii) For any other default (other than a monetary default as set forth in [i]
above), a reasonable period of time not to exceed thirty (30) days.
c. In the event of any default by Tenant as defined herein, Landlord shall have the
option to pursue anyone or more of the remedies available to it as set forth in this Lease
and/or as provided by law within the jurisdiction to which this Lease shall be subject.
The above-described time periods shall be in lieu of and not in addition to, any similar
time periods required by law.
D. Landlord shall be under no obligation to observe or perform any covenant of this
Lease on its part to be observed or performed which accrues after the date of any default
by Tenant hereunder. The various rights and remedies reserved to Landlord herein,
including those not specifically described herein, shall be cumulative, and, except as
otherwise provided by state statutory law in force and effect at the time of the execution
hereof, Landlord may pursue any or all of such rights and remedies, whether at the same
time or otherwise.
15. Default and Re-entry. Should Tenant fail to cure within the time periods set
forth in Paragraph 14B any default specified in Paragraph 14A, in addition to all other
rights or remedies Landlord may have, Landlord, upon abandonment or vacation by or
eviction of Tenant, to the extent provided by law, shall have the immediate right of
re-entry and may remove all persons and property from the Premises. Such property may
be stored in a public warehouse or elsewhere at the cost of and for the account of Ten ant.
Even though Tenant has breached this Lease and abandoned the Premises, this Lease
shall, at the option of Landlord continue in effect for so long as Landlord does not
terminate Tenant's right of possession, and Landlord may enforce all of its rights and
remedies under this Lease, including the right to recover the Rent as it becomes due under
this Lease. In the event Landlord re-enters the Premises in accordance herewith,
Landlord may thereafter elect to terminate the Lease and Tenant's right to possession
thereunder.
Should Landlord terminate this Lease and Tenant's right to possession of the Premises,
pursuant to the provisions of Paragraph 15 above, Landlord may recover from Tenant as
damages, all ofthe following:
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(a) The worth at the time of award of any unpaid rental that had been earned at
the time of such termination;
(b) The worth at the time of award of the amount by which the unpaid rental that
would have been earned after termination until the time of award exceeds the amount
of such rental loss Tenant proves could have been reasonably avoided;
(c) The worth at the time of award of the amount by which the unpaid rental for
the balance of the Lease Term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided;
(d) Any other amount necessary to compensate Landlord for all the detriment
approximately caused by Tenant's failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom, including
without limitation, any costs or expense incurred by Landlord in (i) retaking possession
of the Premises, including reasonable attorneys' fees therefor, (ii) maintaining or
preserving the Premises after such default, (iii) preparing the Premises for reletting to a
new tenant, including repairs or alterations to the Premises for such reletting, (iv)
leasing commissions, and (v) any other costs necessary or appropriate to relet the
Premises; and
( e) At Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by the laws of the state where the
Building is located.
As used in subparagraphs (a) and (b) of this Paragraph, the "worth at the time of award"
is computed by allowing interest at the maximum rate allowed by the usury or similar
law, if any, of the State in which the Building is located. As used in subparagraph (c) of
this Paragraph, the "worth at the time of award" is computed by discounting such amount
at the discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1 %).
16. Quiet Enjoyment. Landlord agrees that subject to the terms, covenants, and
conditions of this Lease, Tenant, on timely paying said Rent and performing the
covenants aforesaid, shall and may peaceably and quietly hold and enjoy the Premises
during the Lease Term, subject to the provisions of Paragraph 17.
17. Rights of Landlord. Landlord and its agents shall have the right:
A. To change the name, number or designation of the Building without liability to
Tenant.
B. At any reasonable time during the Lease Term hereof, to advertise, display and
show the Premises to prospective tenants, mortgagees, insurance agents, prospective
purchasers, or others. Landlord may exhibit the Premises to prospective tenants and
decorate, remodel, repair, alter or othetwise prepare the Premises for re-occupancy,
without any Rent abatement, and may display "For Rent" signs on the Premises.
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C. To constantly have passkeys to the Premises, and every room or part thereof.
D. To enter the Premises at all reasonable times which shall include without
limitation normal business hours (except that in the event of any emergency, Landlord
shall have the right to enter at any time) to inspect the same, to perform its duties under
the Lease, and to perform any work therein (a) that may be necessary to comply with any
laws, ordinances, rules or regulations of any public authority, the Insurance Service
Office or any similar body, (b) that Landlord may deem necessary to prevent waste or
deterioration in connection with the Premises if Tenant does not make, or cause to be
made, such repairs or perform, or cause to be performed, such work promptly after receipt
of written demand from Landlord, and (c) that Landlord may deem necessary in
connection with the expansion, reduction, remodeling or renovation of any portion of the
Building. Nothing herein contained shall imply any duty on the part of Landlord to do
any such work which, under any provision of this Lease, Tenant may be required to do,
nor shall Landlord's performance of any repairs on behalf of Tenant constitute a waiver of
Tenant's default in failing to do the same. No exercise by Landlord of any rights herein
reserved shall entitle Tenant to any compensation, damages or abatement of rent from
Landlord for any injury or inconvenience occasioned thereby. If Landlord makes or
causes any such repairs to be made or performed, as provided for herein, Tenant shall pay
the cost thereof to Landlord, as Additional Rent, promptly upon receipt of an invoice
therefor, except for that work as provided in subparagraph (c) of this paragraph 17D,
which shall be at the sole cost and expense of Landlord. In addition to the foregoing,
Landlord and its agent shall have the right to enter the Premises at all reasonable times for
the purpose of showing the Premises to prospective purchasers or lenders.
E. At any reasonable time and from time to time, whether at the insistence of
Landlord or pursuant to government requirements, at Landlord's expense, to make repairs,
alterations, additions, improvements or decorating, whether structural or otherwise, in or
to an adjoining suite, or to the Building or any part thereof, including the Premises.
Landlord expressly reserves the right to change the configuration or rentable area of the
Building.
In connection with making repairs, alterations, decorating, additions or improvements
under the terms of this Paragraph, Landlord shall have the right, after reasonable notice to
Tenant (except in the event of emergencies, when no notice shall be required), to have
access through the Premises as well as the right to take into and upon and through the
Premises or any other part of the Building, all material that may be required to make such
repairs, alterations, decorating, additions, or improvements, as well as the right in the
course of such work to close entrances, doors, corridors, elevators or other Building
facilities, without liability whatever to Tenant nor shall such access, closures, repairs,
alterations, decorations, additions or improvements be the basis for abatement of Rent.
18. Landlord's Inability to Perform. This Lease and the obligations of Tenant
hereunder shall not be affected or impaired because Landlord is unable to fulfill any of its
obligations or furnish services and utilities hereunder or is delayed in doing so, if such
inability or delay is caused by reason of acts of God, strikes, lockouts, labor troubles,
inability to procure materials, governmental laws or regulations or governmental requests
jtn/hklk/1stam.11 :12/22/97
-12-
for the general public welfare, or other cause beyond the reasonable control of Landlord.
19. Landlord's Defaults. If Landlord shall neglect or fail to perform or observe any
of the terms, covenants, or conditions contained in this Lease on its part to be performed
or observed within thirty (30) days after written notice of default or, when more than
thirty (30) days shall be required because of the nature ofthe default, if Landlord shall fail
to proceed diligently to cure such default after written notice thereof, then Landlord shall
be liable to Tenant for any and all damages sustained by Tenant as a result of Landlord's
breach; provided, however, it is expressly understood and agreed that (a) any money
judgment resulting from any default or other claim arising under this Lease shall be
satisfied only out of Landlord's equity in the Building and/or Landlord's gross revenues
directly attributable to operation of the Building (hereinafter, "Gross Revenues"), (b) no
other real, personal or mixed property of Landlord, wherever located, shall be subject to
levy on any such judgment obtained against Landlord, and (c) if such equity in the
Building and/or Gross Revenues are insufficient to satisfy such judgment, Tenant will not
institute any further action, suit, claim or demand, in law or in equity, against Landlord
for or on the account of such deficiency. Tenant hereby waives, to the extent permitted
under law, any right to satisfy said money judgment against Landlord except from such
equity and/or Gross Revenues. The term "Landlord" for purposes of this Paragraph 19
only shall mean any and all partners, whether general or limited, if any, which comprise
Landlord. Notwithstanding anything to the contrary contained hereinabove, if Landlord
fails to make any repairs to the Premises required of Landlord, after thirty (30) days
written notice from Tenant to Landlord of the necessity for same (except in the case of an
emergency, in which case as soon as reasonably practical after Landlord receives written
notice from Tenant), and the failure has a material detrimental impact on Tenant's ability
to conduct its business, then Tenant, as its sole and exclusive remedy, may make the
repairs on Landlord's behalf and upon delivery to Landlord of a paid bill by Tenant for
any repairs permitted to be made by it pursuant to this Article, Landlord shall reimburse
Tenant for the reasonable expenses incurred by Tenant for the repair. However, if
Landlord commences to make such repairs within the thirty (30) day period or if
Landlord's failure to make such repairs is by due to circumstances beyond Landlord's
control, Tenant shall not have the right to make such repairs on Landlord's behalf.
Nothing contained herein shall be construed to allow Tenant to take an offset against the
Rent and other charges due under this Lease; and, nothing contained herein shall be
binding upon any mortgagee in possession or purchaser of such mortgagee's rights.
If the Premises or any part thereof are at any time subject to any mortgage or deed of trust
and this Lease or the rentals due from Tenant hereunder are assigned to such mortgagee,
trustee or beneficiary (called "Assignee" for purposes of this Paragraph 19 only) and
Tenant is given written notice thereof, including the post office address of such Assignee,
then Tenant shall give written notice to such Assignee, specifying the default in
reasonable detail, and affording such Assignee a reasonable opportunity to make perfor-
mance for and on behalf of Landlord. If and when the said Assignee has made
performance on behalf of Landlord, such default shall be deemed cured.
20. Waiver. No waiver, delay, or omission by Landlord of any provision of this
Lease shall be deemed to be a waiver of any other provision hereof or of any subsequent
breach by Tenant of the same or any other provision, or of any of Landlord's rights or remedies with respect to any such breach. Landlord's consent to or approval of any act by
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Tenant requITIng Landlord's consent or approval shall not be deemed to render
unnecessary the obtaining of Landlord's consent to or approval of any subsequent act of
Tenant, whether or not similar to the act so consented to or approved. No act or thing
done by Landlord or Landlord's agents during the Lease Term shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept such a surrender
shall be valid unless in writing signed by Landlord. No employee of Landlord or of
Landlord's agents shall have any power to accept the keys to the Premises prior to the
termination of this Lease, and the delivery of the keys to any such employee shall not
operate as a termination of this Lease or a surrender of the Premises.
The subsequent acceptance of Rent or any payments of any amounts from Tenant or
any other party by Landlord or its employees or agents shall not be a waiver of any
preceding breach by Tenant of any term, condition or covenant of this Lease, regardless
of Landlord's knowledge of such preceding breach at the time of acceptance of such Rent,
and no payment by Tenant or any other party or receipt thereof by Landlord or its agents
of a lesser amount than the Rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated Rent, nor shall any endorsement or any statement on any
check or any letter accompanying such check or payment as Rent be deemed an accord
and satisfaction, and the Landlord may accept such check or payment without prejudice to
the Landlord's right to recover the balance of such Rent or pursue any other remedy in
this Lease.
Except as otherwise provided by law, Landlord shall not be liable for and Tenant
hereby waives (i) all claims for damages that may be caused by Landlord in peaceably
and lawfully re-entering and taking possession of the Premises as herein provided, (ii) all
claims for damages that may result from the destruction of or injury to the Premises or
Building, subject to any other terms of this Lease, and (iii) any right of redemption of
relief from forfeiture in the event of eviction of Tenant or repossession of the Premises by
Landlord.
21. Transfer of Landlord's Interest. In the event of a conveyance by Landlord of
the Premises or the Building or of any portion of the Building or the Premises, such
conveyance shall release Landlord from any liability, including for Security Deposits,
upon any of the covenants or conditions, express or implied, herein contained in favor of
Tenant; and in such event, Tenant agrees to look solely to the responsibility of the
successor in interest of Landlord and to this Lease. Upon written notice from Landlord of
such conveyance, Tenant shall acknowledge ownership in the transferee and attorn and
continue in quiet enjoyment of the Premises. Landlord shall have the right to sell,
hypothecate, mortgage, transfer, sublet or assign this Lease and/or any or all of its
interests in the Premises and/or the Building and shall not be liable for obligations
thereafter accruing hereunder.
22. Assignment and Subletting. Tenant acknowledges that Tenant's agreement to
operate in the Premises for the use set forth in the Existing Agreement for the entire
Lease Term was a primary inducement and precondition to Landlord's agreement to lease
the Premises to Tenant. Accordingly, Tenant's interest in the Premises shall be limited to
the use set forth in the Existing Agreement and shall be non-transferable. Any attempt by
Tenant to enter into any Occupancy Transaction shall be void, and of no force or effect.
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23. Holdover Provisions. It is expressly agreed and understood by both Landlord
and Tenant that the failure by Tenant to surrender possession of the Premises at the
expiration of the Lease Term or earlier termination of this Lease shall result in substantial
damages to Landlord and those damages are impossible or impracticable to measure. In
the event Tenant does not surrender possession of the Premises to Landlord as set forth
herein, Tenant shall be deemed a hold over tenant on a month-to-month basis and shall
pay to Landlord, as liquidated damages, for each month or portion of a month in which
Tenant holds over in the Premises, a minimum monthly rent equal to twice the monthly
installment of Base Rent last effective immediately prior to the Expiration Date or earlier
termination of the Lease; such amount shall be payable in advance on the first day of each
and every month. In no event shall any provision contained in this Lease be deemed to
permit Tenant to retain possession of the Premises after the expiration of the Lease Term
or earlier termination of this Lease.
24. Rules and Regulations. Tenant shall agree to keep and perform each and all of
the rules and regulations of the Building which are set forth in Exhibit B attached to this
Lease. Said rules and amendments thereto shall not be inconsistent with the terms of this
Lease, and if any inconsistency does occur, this Lease shall govern. Landlord shall have
the right to amend said rules and regulations and to make other and different reasonable
rules and regulations relating to the Building, or the preservation of safety, care,
cleanliness or good order therein, and all such rules and regulations so made by Landlord,
after notice thereof to Tenant, shall be binding upon Tenant and become conditions of
Tenant's tenancy. All of such rules and regulations shall be uniformly applicable to all
tenants, but nothing in this Paragraph shall be construed to give Tenant any claim,
demand or cause of action against Landlord by reason of or arising out of the breach or
violation of such rules and regulations by any other tenant, lessee, occupant, or user of the
Building. The violation of any such rules and regulations by Tenant shall constitute a
material breach of this Lease.
25. Estoppel Certificate. Tenant shall at any time and from time to time, within ten
(10) days after written request from Landlord, execute, acknowledge and deliver to
Landlord a statement in writing (i) certifying that this Lease is unmodified and in full
force and effect or, if modified, stating the nature of such modification and certifying that
this Lease as so modified, is in full force and effect, and the dates to which the rental and
other charges are paid in advance, if any, and the amounts of any security deposits; and
(ii) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the
part of Landlord hereunder, or specifying such defaults if any are claimed. Any such
statement may be relied upon by any prospective purchaser, mortgagee or encumbrancer
of all or any portion of the Building, or the real property on which the Building is
situated.
Tenant's failure to deliver such statement within such time period shall be conclusive
upon Tenant that (i) this Lease is in full force and effect, without modification except as
may be represented by Landlord, (ii) there are no uncured defaults in Landlord's
performance, and (iii) not more than one (1) month's Rent has been paid in advance.
26. Attorney Fees. If at any time after the Effective Date, either Landlord or Tenant
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institutes any action or proceeding against the other relating to the provisions of this
Lease, or any default hereunder, the non-prevailing party in such action or proceeding
shall reimburse the prevailing party for the reasonable expenses of attorney fees and all
costs and disbursements incurred therein by the prevailing party, including without
limitation, any such fees, costs or disbursements incurred on any appeal :from such action
or proceeding. Subject to the provisions of local law, the prevailing party shall recover
all such fees, costs or disbursements as costs taxable by the court or arbiter in the action
or proceeding itself without the necessity for a cross-action by the prevailing party.
27. Entire Agreement. This Lease contains all the terms, covenants, conditions and
agreements between Landlord and Tenant relating in any manner to the rental, use and
occupancy of the Premises. No prior or other agreement or understanding pertaining to
the same shall be valid or of any force and effect; and the terms, covenants and conditions
of this Lease cannot be altered, changed, modified or added to, except in writing signed
by Landlord and Tenant. No representations, inducements, understanding or anything of
any nature whatsoever, made, stated or represented by Landlord or anyone acting for or
on Landlord's behalf, either orally or in writing, have induced Tenant to enter this Lease,
and Tenant acknowledges, represents and warrants that Tenant has entered into this Lease
under and by virtue of Ten ant's own independent investigation.
28. Captions, Definitions and Severability. The captions of the paragraphs and
subparagraphs of this Lease are for convenience and easy reference only and shall not be
considered or referred to in resolving questions of construction. The words "Landlord"
and "Tenant" wherever used herein shall be applicable to one or more persons as the case
may be, and the singular shall include the plural, and the neuter shall include the
masculine and feminine; and if there be more than one, the obligations thereof shall be
joint and several, and the word "Tenant" shall include Tenant's subtenants,
concessionaires and licensees as the context may require. The word "persons" wherever
used shall include individuals, firms, associations and corporations. Whenever in this
Lease any words of obligations of duty are used, such words shall have the same force
and effect as though made in the form of covenants. All of Tenant's covenants and
agreements herein contained are conditions, and the strict and prompt performance of
each shall be condition precedent to the right of Tenant to remain in possession of the
Premises or to have this Lease continue in effect. If any provision of this Lease shall be
adjudged to be invalid, void or illegal, it shall in no way affect, impair or invalidate any
other provision hereof, the parties hereto agreeing that they would have entered into the
remaining portion of this Lease notwithstanding the omission of the portion or portions
adjudged invalid, void or illegal.
29. Other Uses by Landlord. Nothing contained in this Lease shall be construed to
exclude or prohibit Landlord :from using or leasing any offices, facilities, or other space in
the Building, or any part or portion thereof, or any other property owned or controlled by
Landlord, for any lawful purposes, although in direct competition with Tenant.
30. Relationship of the Parties. Nothing contained in this Lease shall be deemed or
construed by the parties hereto, or by a third person, to create the relationship of principal
and agent or of partnership or of joint venture or of trustee and beneficiary or of any
association between Landlord and Tenant and neither the method of computation of Rent
jtn/hklk/1 stam.11 : 12/22/97
-16-
nor Landlord's obligation with respect to the common area, nor any other provisions
contained in this Lease, nor any acts of the parties hereto, shall be deemed to create any
relationship between Landlord and Tenant other than the relation oflandlord and tenant.
31. Successors and Assigns. Each and all of the covenants and obligations of this
Lease shall be binding upon and inure to the benefit of the parties hereto, their respective
heirs, executors, administrators, successors and assigns, subject at all times, nevertheless,
to all agreements and restrictions herein contained with respect to assignment, subletting,
hypothecation, or any other transfer or conveyance of Ten ant's interest in this Lease.
32. Use of Building Name. Tenant shall not use the name of the Building for any
purpose other than as the address of the business to be conducted by Tenant in the
Premises.
33. Time. Time is of the essence with respect to the performance of every provision
of this Lease in which time of performance is a factor.
34. Applicable Law. This Lease shall be construed in accordance with the laws of
the state in which the Building is located.
35. Execution and Delivery. The submission ofthis Lease for examination does not
constitute an offer to lease or a reservation of or an option for the Premises and this Lease
shall become effective only upon execution and delivery thereof by Landlord and Tenant.
No amendments, modifications of or supplements to this Lease shall be effective unless
the same shall be in writing, executed and delivered by Landlord and Tenant.
36. Notices. Every notice or other communication to be given by either party to the
other with respect hereto or to the Premises shall be in writing and shall not be effective
for any purpose unless the same shall be served personally (including delivery by Federal
Express, Express Mail or other similar overnight or same day courier service), or by
United States certified mail, return receipt requested, postage prepaid, addressed to the
parties as follows:
To: Landlord:
Property Manager
PK II Larwin Square SC LP,
1631-B South Melrose Drive
Vista, California 92081
With a copy to:
PK II Larwin Square SC LP,
Attn: Chief Operating Officer
1631-B South Melrose Drive
Vista, California 92081
To: Tenant:
jtn/hklk/1 stam.11 : 12/22/97
-17-
City of Tustin
300 Centennial Way
Tustin, CA 92780
Every notice or other communication hereunder shall be deemed to have been given as
of the third business day following the date of such mailing or immediately if personally
delivered.
Nothing in this paragraph shall be deemed to affect the application of any statute
governing the giving of notice between landlords and tenants.
37. Authority of Tenant. If Tenant is a corporation, the person or persons executing
this Lease on behalf of Tenant represent, covenant and warrant to Landlord as of the date
Tenant executes and delivers this Lease that: (a) Tenant is a duly constituted corporation
in good standing and qualified to do business in the state where the Building is located,
(b) Tenant has paid all applicable franchise and corporate taxes, (c) Tenant will file when
due all forms, reports, fees and other documents necessary to comply with applicable
laws, and (d) the signatories signing on behalf of Tenant have the requisite authority to
bind Tenant pursuant to Tenant's bylaws or a certified copy of a resolution authorizing the
same by Tenant's board of directors.
38. Waiver of Trial by Jury. Landlord and Tenant hereby waive any and all rights
to a trial by jury in any action, proceeding or counterclaim (including any claim for injury
or damage and any emergency and other statutory remedy in respect thereot) brought by
either against the other on any matter arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, and/or Tenant's use or occupancy of the
Premises.
39. Security Deposit. Intentionally omitted.
39. Late Charges. Tenant acknowledges that Tenant's late payment to Landlord of Rent
or other sums due hereunder will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which is extremely difficult to ascertain. Such costs include, but
are not limited to, processing and accounting charges and late charges that may be imposed
upon Landlord by the terms of any mortgage or deed of trust covering the Premises.
Accordingly, if any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee when due, then Tenant shall pay to Landlord a
late charge equal to Two Hundred Fifty Dollars ($250.00) or ten percent (10%) of the amount
due whichever is greater, provided that such amount will not exceed the maximum rate
permitted by law, plus any attorney fees incurred by Landlord by reason of Tenant's failure to
pay rent and/or other charges when due hereunder. Both Landlord and Tenant agree that such
late charge represents a fair and reasonable estimate of the costs that Landlord will incur by
reason of Tenant's late payment. Acceptance of such late charge by Landlord shall in no
event constitute a waiver of Tenant's default with respect to such overdue amount, nor
prevent Landlord from exercising any of its other rights and remedies granted hereunder.
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-18-
EXHIBIT "A"
SHOPPING CENTER
SITE PLAN
THE SITE PLAN, ATTACHED AND INCORPORATED HEREIN, IS INTENDED
TO BE AN APPROXIMATE DEPICTION OF THE PRESENT CONCEPT OF
THE CENTER AND THE IMPROVEMENTS THEREOF. NO
REPRESENT A TION OR WARRANTY IS MADE WITH RESPECT TO THE
ACTUAL LOCATION OR NUMBER OF THE RETAIL STORES, BUILDINGS,
CURB CUTS, ABUTTING THOROUGHFARES, PARKING AREAS, TRAFFIC
PATTERNS, OR OF THE TENANTS INTENDED TO BE INCLUDED WITHIN
THE CENTER. LANDLORD SPECIFICALLY RESERVES THE RIGHT TO
CHANGE THE CONTENT AND CONFIGURATION OF THE CENTER FROM
TIME TO TIME AND AT ANY TIME AS LANDLORD DESIRES IN ITS SOLE
AND ABSOLUTE DISCRETION.
Larwin Square
1 st Street
\ \\ \ \ \\\\\\~\\\\
:!5 _ :::l ~
Van's Supermarket
550
Copyright @ 2005 Storetrax.com, Inc.
jtn/hklk/1 stam.11 : 12/22/97
EXHIBIT A
Page 1 of 1
EXHIBIT B
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules, stairways, corridors,
or halls shall not be obstructed or encumbered by any Tenant, or used for any purpose
other than ingress and egress to and from the Premises.
2. No awnings or other projections shall be attached to the outside of the Building
without the prior written consent of Landlord. No curtains, blinds, shades, or screens
shall be attached to or hung in, or used in connection with, any window or door of the
Premises without the Prior written consent of Landlord. Such awnings, projections,
curtains, blinds, shades, screens or other fixtures must be of a quality, type, design and
color, and attached in the manner approved by the Landlord.
3. Subject to the provisions of this Lease, no sign, advertisement, notice or other lettering
shall be exhibited, inscribed, painted or affixed by any Tenant on any part of the outside
of the Premises or Building without the prior written consent of Landlord. In the event of
the violation of the foregoing by any Tenant, Landlord may remove same without any
liability, and may charge the expense incurred by such removal to the Tenant or Tenants
violating this rule.
4. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and
air into the halls, passageways or other public places in the Building shall not be covered
or obstructed by any Tenant, nor shall any bottles, parcels or other articles be placed on
the window sills.
5. No show cases or other articles shall be put in front of or affixed to any part of the
exterior of the Building, nor placed in the stairways, elevators, halls, corridors or
vestibules without the prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not be used for any
purposes other than those for which they were constructed, and no sweepings, rubbish,
rags or other substances shall be thrown therein. All damages resulting from any misuse
of the fixtures shall be borne by Tenant who, or whose servants, employees, agents,
visitors or licensees shall have caused the same.
7. No space in the Building shall be used for non-office purposes, including the storage
of merchandise for the sale of merchandise, goods or property without the prior written
consent of Landlord.
8. No Tenant shall make, or permit to be made, any unseemly or disturbing noises or
disturb or interfere with occupants of this or neighboring buildings or premises or those
having business with them, whether by way of the use of any musical instrument, radio,
television set, talking machine, unmusical noise, whistling, singing, or in any other way.
No Tenant shall throw anything out of the doors, windows or skylights or down the
passageways. No dogs or other animals shall be permitted in the Building without the
written consent of Landlord.
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EXHIBIT B
Page 1 of 3
9. No Tenant, or any of Tenant's servants, employees, agents, visitors or licensees, shall
at any time bring or keep upon the Premises or Building any inflammable, combustible or
explosive fluid, chemical or substance, unless stored in a manner satisfactory to insurance
and legal requirements.
10. Landlord agrees to furnish to Tenant, free of charge, two keys for each corridor door
entering the Premises, and additional keys will be furnished at a charge by Landlord equal
to its cost plus fifteen percent (15%) upon delivery to Landlord of an order for such keys
signed by Tenant or Tenant's authorized representative. All such keys shall remain the
property of Landlord. No additional locks shall be allowed on any door of the Premises,
and Tenant shall not make or permit to be made any duplicate keys, except those
furnished by Landlord. Upon termination of this Lease, Tenant shall surrender to
Landlord all keys to the Premises, and give to Landlord the explanation of the
combination of all locks, if any, in the Premises.
11. All removals from or the carrying in or out from the Building or Premises of any
freight or furniture of any description must take place during the hours and in the manner
which the Landlord or its agents may determine from time to time. Landlord reserves the
right to inspect all such freight or other articles to be brought into the Building and to
exclude from the Building all freight or other articles which violate any of these Rules
and Regulations or the Lease of which these Rules and Regulations are a part. No article
or freight, the weight or nature of which may, in Landlord's determination, constitute a
hazard or danger to person or property, shall be permitted in the Building, and Landlord
shall have the right to require Tenant to remove or relocate articles or freight which,
whether individually or in the aggregate and in the opinion of Landlord, may endanger
person or property. Any damages caused by delivery of or removal of freight or other
articles shall be paid by Tenant.
12. No Tenant shall occupy or permit any portion of the Premises demised to him to be
occupied as an office for a public stenographer or typist, or for the possession, storage,
manufacture, or sale of liquor, or narcotics, or as an employment bureau.
13. Landlord shall have the right to prohibit any advertising by any Tenant which tends to
impair the reputation of the Building or its desirability as a Building for offices, and upon
written notice from Landlord, Tenant shall refrain from or discontinue such advertising.
14. Landlord reserves the right to exclude from the Building at any time other than
normal daily business hours, and at all hours on Sundays and legal holidays, all persons
who do not present identification acceptable to Landlord or its agents; but Landlord shall
not in any event be responsible for death or injury to person or loss or damage to property
of any Tenant, guest, visitor, licensee, invitee or other user of the Building. In the event
Landlord elects to furnish passes for ingress and egress, Landlord will furnish passes to
persons for whom any Tenant requests same in writing. Each Tenant shall be responsible
for all persons for whom he requests such pass and shall be liable to Landlord for all acts
of such persons. Tenant, its agents, servants and employees shall, before leaving the
Premises unattended, close and lock all doors and turn off all lights.
15. Unless Landlord shall furnish electricity hereunder as a service included in the rent,
jtn/hklkl1 stam.11 : 12/22/97
EXHIBIT B
Page 2 of 3
each Tenant shall, at its expense, provide artificial light for the employees of Landlord
while doing janitorial service or other cleaning, and in making repairs or alterations to
said Premises. Tenant shall not employ any person or persons other than the janitorial
service of Landlord for the purpose of cleaning or taking charge of the Premises leased,
without the written consent of Landlord, it being understood and agreed that Landlord
shall be in no way responsible to any Tenant or employee, guest, or invitee of the same
for any loss of property from the Premises, however occurring, or for any damage done to
the furniture by the janitor or any of his employees, or by any other person or persons
whomsoever. Any person or persons employed by Tenant for the purposes of providing
janitorial services, with the written consent of Landlord, must be subject to and under the
control and direction of the superintendent of the Building, in all things, in the Building
and outside of the Premises.
16. The superintendent of the Building may at all times keep a pass key, and he and other
agents of Landlord shall at all times be allowed admittance to the Premises.
17. Employees shall not perform any work or do anything outside of the regular duties,
unless under special instructions from the office of Landlord.
18. Canvassing, soliciting and peddling in the Building is prohibited and each Tenant
shall cooperate to prevent same.
19. There shall not be used in any space, or in the public halls of the Building, either by
any Tenant or by jobbers or others, in the delivery or receipt of merchandise, any hand
trucks except those equipped with rubber tires and side guards.
20. Landlord reserves the right to make such other and further reasonable rules and
regulations as in its judgment may from time to time be needed for the Building or for the
safety, care, cleanliness, and preservation of good order therein.
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EXHIBIT B
Page 3 of 3
ADDENDUM 1
TENANT IMPROVEMENT ALLOWANCE
THIS ADDENDUM TO LEASE ("Addendum") is attached to and forms a partof
that certain Lease dated , by and between PK II Larwin Square
SC LP, a Delaware limited partnership, as Landlord, and City of Tustin, as Tenant. In the event
of any conflict between the provisions of the Lease and the provisions of this Addendum, the
provisions of this Addendum shall prevail.
1. Tenant Improvement Allowance. Subject to all ofthe terms and
conditions set forth herein, Landlord shall reimburse to Tenant an amount equal to those costs
directly incurred by Tenant in performing Tenant's Work ("Tenant Improvement Expenses")
providing, however, that Tenant Improvement Expenses shall not include expenses incurred by
Tenant in purchasing Tenant's movable furniture and equipment to be used at the Premises in
connection with the operation of Ten ant's business at the Premises, such amount not to exceed
Two Thousand Ninety-two and 00/100 Dollars ($2,092.00) (the sum of the funds reimbursed to
Tenant shall be collectively referred to as the "Allowance"). In the event Tenant defaults under
the Lease and fails to cure such default in a timely fashion, Tenant shall be obligated to repay to
Landlord the total sum ofthe Allowance and as part of the Front-End Expenses pursuant to
Article 19.3(d) ofthe Lease. Except as also provided in Article 19.3(d) of the Lease, Tenant's
obligation to repay the Allowance shall be contingent upon the occurrence of any default by
Tenant with respect to any of its obligations under the Lease, as further set forth in Paragraph 5,
below.
2. Security Interest. Tenant shall grant to Landlord a first priority security
interest ("Security Interest") in all equipment, fixtures, furnishings and related personal property
now or hereafter owned by Tenant and located on the Premises, (the "Collateral"), as security for
the entire amount of the Allowance as referenced in Article 13.4 ofthe Lease.
3. Representation and Warranty. Tenant expressly represents and warrants
that Tenant owns all of the Collateral free and clear of all liens, encumbrances, mortgages and
any other interest that might impair Landlord's first priority Security Interest therein. Upon
execution hereof, Tenant shall deliver to Landlord written documentation, reasonably satisfactory
to Landlord, evidencing that Tenant's representations herein are true and accurate.
4. Conditions to Disbursement. No disbursement of the Allowance shall be
made unless Tenant shall have performed and submitted to Landlord the following:
(a) Tenant has opened for business and commences paying rent;
(b) Certificates of insurance showing that the insurance required of
Tenant under Article 9.2 of the Lease is in place and fully effective;
(c) A lien waiver and release from each construction contractor and
subcontractor covering the full amount of Tenant's work; and
(d) Copies of all licenses, permits and approvals.
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Page 1 of 2
( e) Original invoices for the work performed.
(f) Tenant's architect certifies to Landlord that the Tenant's Work fully
complies with all Regulations; (g) an unconditional Certificate of Occupancy has been issued for
the Premises; and (h) no mechanic's liens have been recorded against the Center or any portion
thereof, and the statutory period for the recording of such liens has expired.
5. Entire Agreement. The Lease, this Addendum and any other Addenda
attached to the Lease contain the entire agreement of the Parties regarding the lease of the
Premises and all other prior or contemporaneous agreements, understandings, representations and
statements, oral or written, are merged herein. No modification, waiver, amendment, discharge
or change of the Lease or this Addendum shall be valid unless in writing and executed by all the
parties hereto.
LANDLORD:
PK II Larwin Square SC LP,
a Delaware limited partnership
By: PK II Larwin Square GP LLC, its General Partner
By: PK II Holdco LLC, its Member
By: PK II Holdings LLC, its Managing Member
By: Kimco PK, LLC, its Managing Member
By: Kimco PK Inc., its Managing Member
By:
Name:
Title:
TENANT:
City of Tustin
By:
Its:
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ADDENDEMUM 1
Page 2 of 2